Hidden Aspects of the Global Recession and the Emerging Post-Crisis Two Asia Divided
ASIA FORUM with Steven Rosefielde
Professor of Economics, University of North Carolina, Chapel Hill
Tuesday, November 10, 2009, 10:00-11:30
The global financial crisis 2008-09, and the ensuing recession are frequently described as business cycle outliers, implying that we know how to cope, and the tempest will swiftly pass leaving us only mildly scathed. However, preliminary findings from the Japan Foundation Project “Global Shock Wave” point to a different possibility, with intriguing implications for Asia.
The American market system seems to be undergoing an “evolutionary” change from a self-equilibrating to an “excess demand macro-disequilibrium” regime where budgets are perpetually imbalanced, and credit over-expanded. The government no longer accumulates surpluses in boom times to pay for recessionary deficits as strict Keynesian theory requires. This has created a “one way street” for speculators, readily apparent in the 2009 recovery process that augurs more frequent, and perhaps more intense crises ahead, with unexpected consequences for Asia.
Asia’s advanced nations have been hit harder than the east’s emerging countries, and seem poised to suffer further from appreciating currencies. The adjustment burden for America’s new excess demand disequilibrium model is being shifted on to the shoulders of Japan, South Korea, Taiwan and Singapore, causing them to stagnate or worse, while the rest of Asia overtakes them.
Steven Rosefielde is Professor of Economics at the University of North Carolina, Chapel Hill. His special areas of expertise are Russian economics(including military-industrial matters), and comparative economic systems. He is currently directing an international project for the Japan Foundation dealing with the global crisis’s impact on Asia.
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